Gross buy-to-let rental yields rose modestly in the first quarter, with Wales and the North East again delivering the strongest regional returns, according to Paragon Bank.

The lender’s Q1 2026 Buy-to-Let Yields report, based on its own lending data, put average gross yields at 6.96% at the end of the quarter, up from 6.92% in Q4 2025.

The figures point to a market where rental income has continued to hold up even as house price growth remained subdued in the opening months of the year. For landlords and brokers, the data also underlines the continuing gap between lower-yielding southern locations and higher-return regions in the north and Wales.

REGIONAL SPLIT

Wales topped Paragon’s regional table with a gross yield of 8.78%, despite a slight quarterly dip of 0.04 percentage points. The North East followed at 8.10%, down 0.09 percentage points over the same period.

The North West ranked third on 7.87%, ahead of the East Midlands on 7.58% and Yorkshire & the Humber on 7.45%. Scotland also posted a yield of 7.45%, while the South West came in at 7.36%.

At the other end of the table, Greater London remained the weakest-performing region for gross yield at 5.74%. The South East returned 6.40%, while West Midlands yields stood at 7.01% and East Anglia at 7.04%.

Although Wales and the North East remained the highest-yielding regions overall, several of the top-performing areas saw small quarter-on-quarter declines. By contrast, Scotland rose 0.11 percentage points and the South East increased by 0.13 percentage points.

PROPERTY TYPES

By asset class, houses in multiple occupation continued to generate the strongest returns. HMO yields increased by 0.17 percentage points over the quarter to 8.78%, while multi-unit blocks rose by 0.21 percentage points to 7.48%.

Flats and terraced properties delivered similar returns, at 6.34% and 6.30% respectively. Semi-detached homes rose to 5.60%.

Detached properties remained the lowest-yielding asset type at 4.60%, while bungalows returned 5.10%.

Louisa Sedgwick, managing director of mortgages at Paragon Bank, said: “Yields have started 2026 on a positive footing, edging up slightly. This reflects the slightly flat housing market during the quarter against tenant demand that is still strong, despite easing over the past 12 months.

“HMOs, MUBs and semi-detached homes have particularly seen healthy yield increases over the period, while regionally Wales and the North East continue to generate the strongest returns.

“We’re seeing robust demand in student markets in Wales particularly, which is underpinning the strength of this market.”